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Some New Zealand institutions are crying foul over the high level of foreign ownership in the newly-formed Fonterra Shareholders Fund, though others say the way units were distributed is just a reflection of the extensive groundwork undertaken by the issue's promoters over the past two years.

A total of 58 per cent of units have been allocated to New Zealand retail and institutional investors, as well as to individuals associated with the co-operative. The remaining 42 per cent allocated to offshore investors and institutions was seen as high by some, given the intense local interest in the issue.

"The allocation to overseas institutions was very surprising, and it will be interesting to see how long that stock will stay in overseas hands or whether it will drift back into New Zealand and provide a short term profit for those overseas institutions," said one fund manager. "It's quite outrageous really."

He estimated $200 million to $250 million of units went to overseas institutions, with about $70 million to $90 million going to local institutions.

Other fund managers were more philosophical about the way stock was allocated.

Andrew Bascand, managing director of Harbour Asset Management, said the high level of foreign ownership should come as no surprise, given the amount of effort that had gone into promoting the issue offshore.

"This is a well canvassed initial public offer [IPO] - probably the best in the last decade that I can recall," Bascand said.

"It should be no shock that global investors are very important, and they are a very important part of this equity market.

"There is intense interest in the agriculture investment universe at the moment - particularly in food - so I am not at all surprised that there was intense interest expressed in bids going into the IPO process."

Guy Elliffe, head of equity investments at AMP Capital, said it was up to Fonterra as to how it chose to allocate units in the fund.

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"If they decide to distribute shares in [a] certain way, then that's fine," he said.

"It's not a case of being happy or unhappy, it's just that this is out of our control."

Sam Stubbs, chief executive of Tower Investments, said Tower had avoided getting involved in the Fonterra units on the grounds that they do not carry voting rights.

However, he said Tower would take a wait-and-see approach as to how the fund operated in the years ahead before reconsidering.

"We will watch it closely."

Units in the newly-formed Fonterra Shareholders Fund were priced at the very top of the dairy co-operative's $4.60 to $5.50 indicative range following a two-day institutional book-build, which ended on Tuesday.

Fonterra accepted $25 million in oversubscriptions, which took the fund's size to $525 million.

More than 2500 members of the "Fonterra Family" - sharemilkers, former farmers and Fonterra employees - as well as around 7000 retail and institutional investors, bought units.

Fonterra shares on the farmer-only Fonterra Shareholders' Market are expected to track the price of units in the Fonterra Shareholders' Fund when trading on the NZX starts tomorrow.

The issue will be the biggest sharemarket listing in Australasia since the privatisation of Queensland Rail in 2010.